Ethical Decision-making in Business

CHARACTERISTICS OF INDIVIDUALSCognitive BiasesIndividual Differences

CHARACTERISTICS OF ORGANIZATIONSGroup and Organizational PressuresOrganizational Culture

MORALAWARENESS

ETHICALJUDGMENT

ETHICALBEHAVIOR

Process of Individual Ethical Decision-Making Behavior

Ethical decision-making process

Moral awareness

More likely to recognize moral issue when

• Peers consider it morally problematic• Moral language is used when problem

is presented• Decision could cause serious harm to

others

Sound ethical decision-making

1. Gather the facts2. Define the ethical issues3. Identify the affected parties4. Identify the consequences5. Identify the obligations6. Consider your character and integrity7. Think creatively about potential actions8. Check your gut

Ethics and organizational culture

1. Who shapes your ethical decisions?2. The Pygmalion effect3. Rewards and punishments4. Goals5. Diffusion of responsibility6. Roles and deindividuation

Ethics and the law

• The relationship between ethics and the law

• Corporate rules as “law”• Discrimination laws• Whistleblower laws• Federal Organizational Sentencing

Guidelines

Cognitive biases

Fact gathering• Overconfidence about your

knowledge of the facts• Falling into the confirmation trapSo…• Think about ways that you could be

wrong

Cognitive biases

Looking at consequences• Reduced number of consequences• Consequences for self vs. others• Consequences as risk

– Illusion of optimism and illusion of control

• Escalation of commitmentSo…• Invite input, especially from those who

disagree with you

Cognitive biases

Thinking about integrity• Illusion of superiority• Ethics of your profession

Individual differences

• Level of moral development– Level 1: Rewards/punishments, exchanges– Level 2: Shared norms, societal

obligations– Level 3: Principled, autonomous

• Locus of control• Ego strength

Desired Moral Approbation

• “Desire for moral approval from oneself or others”

• Level of desired moral approbation (DMA) is an individual difference

• Study discovered three types of DMA– DMA from Others—Praise – DMA from Others—Blame– DMA from the Self

Scoring the Moral Approbation scale

Average your responses for these 20 questions into three categories:•DMA-OP 1, 3, 5, 6, 8, 13, 16, 19, 20•DMA-OB 2, 9, 10, 12, 15, 18•DMA-S 4, 7, 11, 14, 17

Desired Moral Approbation averages

• DMA from Others—Praise 4.93• DMA from Others—Blame 4.35• DMA from the Self 5.17

Approaches to moral judgment

• Utilitarianism• Rights• Justice• Objectivism• Social contract• Care

Utilitarianism

• Decision rule – Maximize the common good

• Biggest pro– Replaces partiality with science

• Biggest con– The means don’t matter

• Example– “The Ones who Walk Away from Omelas”

Robert Nozick’s Rights Theory

• Decision rule – Freedom from force and fraud

• Biggest pro– Virtually complete freedom of action with

minimal government intrusion

• Biggest con– Almost complete disregard of interests of

others with a stake in behavior

• Example– Certain “payday loan” providers

John Rawls’ Theory of Justice

• Decision rule– Greatest benefit to the least advantaged

• Biggest pro– “Unbiased” approach to social justice

• Biggest con– Denies free will, meritocracy

• Example– Ben and Jerry’s Ice Cream

The “real” Rawls

• Incorrect approach in textbook• Really…

– Contractors are stripped of bias to decide on two principles of justice

– “Greatest benefit…” rule the most challenging

– Veil of ignorance is not used for decision making